Schemes urged to adopt guide for tackling deforestation

Deforestation guide for schemes launched 

Pension schemes are being urged to adopt a new guide to ensure their investments are not driving deforestation. The guidance, created by Global Canopy, Make My Money Matter and Systemiq, in consultation with 12 pension funds, allows schemes to “identify, address and eliminate deforestation risk and associated human rights abuses, as well as future-proof their investments”, according to a statement. The guidance sets out six phases, from identifying and mapping deforestation and its associated human rights risks within portfolios, to setting a policy and engaging with asset managers, to eliminating deforestation from their investments, it added. According to Joe Dabrowski, deputy director of policy at the Pensions and Lifetime Savings Association: “The severity of deforestation and its impact on climate change and biodiversity cannot, and should not, be overlooked.” He noted that the industry body is encouraging “all schemes to look at this guide and utilise it to help inform their approach to responsible investment, and their contribution to achieving global commitments to tackle deforestation by 2030”. Previous research from the three organisations, published in February, revealed that more than £300bn of UK pension money is invested in companies and financial institutions with high deforestation risk.

Engagement improves due to Stewardship code

New research from the Financial Reporting Council, published on July 5, showed that 77 per cent of asset owners believe the quality of engagement with investee companies has improved due to the Stewardship Code influence. The survey, based on evidence from 55 asset managers and owners, showed that all organisations in the sample had undertaken some organisational restructuring to better integrate stewardship within their investment decision-making, a new requirement of the code. Almost all respondents (96 per cent) reported increases in the size of their stewardship teams since the introduction of the revised code. According to the research, asset owners reported that the code allowed them to feel more empowered to monitor their investment managers. The FRC has been responsible for the UK Stewardship Code since December 2009, which was revised in 2019 to include a wider definition of stewardship. 

Investor coalition presses for disclosure on mental health 

A coalition of 29 asset owners, institutional investors and stewardship service providers, with $7tn (£5.8tn) in assets, wrote to the chief executives of 100 of the UK’s largest listed companies, calling for action and disclosure on workplace mental health. The group, convened by asset manager CCLA, urged CEOs to “ensure that they optimise their organisation’s performance by eliminating avoidable costs associated with mental ill-health, and taking concerted efforts to create the working conditions under which every individual can thrive”, it said. The CCLA cited research on mental health and employers by Deloitte, which estimated the total annual cost of poor mental health to the private sector in the UK was £43bn to £46bn in 2020–21, an increase of 25 per cent since pre-pandemic estimates in 2019.